Increases For Gasoline, Natural Gas Fuel Jump In Consumer Prices

WASHINGTON — Consumer prices jumped 0.6 percent in June, reflecting surging gasoline prices and a record rise in the cost of natural gas. Most other prices posted modest increases.

The seasonally adjusted advance in the consumer price index, the most closely watched inflation gauge, came after prices rose just 0.1 percent in May, the Labor Department said Tuesday.

Outside the volatile energy and food categories, the "core" rate of inflation rose just 0.2 percent for the third month in a row. That matched many analysts' expectations and suggested that most other prices were under control.

"The core is the one to look at," said Greg Valliere, managing director at Schwab Washington Research Group. "We have moderate inflation in an economy that is cooling, and that's not a bad thing."

But Valliere and other economists noted the report showed higher energy costs were starting to seep into other sectors of the economy, a potentially troubling sign that may keep the Fed from declaring victory over inflation.

June's performance was close to the 0.5 percent rise many analysts had expected. It was the largest increase since March.

So far this year, overall consumer prices have been rising at an annual rate of 4.2 percent, compared with a 2.7 percent increase last year. The pick up in this year's prices is mostly a result of rising energy costs. The core rate rose at an annual rate of 2.6 percent for the first six months.

After falling sharply in May, energy prices shot up 5.6 percent in June, the largest increase since April 1999. Economists predicted a big jump in June's energy prices, in part because May's report didn't fully capture these higher costs.